II. Significant Accounting Policies Followed By The Company
(a) Basis Of Preparation
(i) Compliance With Ind AS
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred
to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘Act’)
read with the Companies (Indian Accounting Standards) Rules,2015 as amended and other relevant provisions of the
Act.The accounting policies are applied consistently to all the periods presented in the financial statements.
(ii) Historical Cost Convention
The financial statements have been prepared on a historical cost basis, except for the following:
1) certain financial assets and liabilities that are measured at fair value;
2) assets held for sale - measured at lower of carrying amount or fair value less cost to sell;
3) defined benefit plans - plan assets measured at fair value;
(iii) Current / non-current classification
The company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is
treated as current when it is:
? Expected to be realised or intended to be sold or consumed in normal operating cycle
? Held primarily for the purpose of trading
? Expected to be realised within twelve months after the reporting period, or
? Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting period
All other assets are classified as non-current.A liability is current when:
? It is expected to be settled in normal operating cycle
? It is held primarily for the purpose of trading
? It is due to be settled within twelve months after the reporting period, or
? There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The company classifies all other liabilities as non-current.Deferred tax assets and liabilities are classified as non-current
assets and liabilities.The operating cycle is the time between the acquisition of assets for processing and their realisation
in cash and cash equivalents. The company has identified twelve months as its operating cycle.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the
requirement of Schedule III, unless otherwise stated.
(b) Use Of Estimates And Judgments
The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company
and are based on historical experience and various other assumptions and factors (including expectations of future events)
that the Company believes to be reasonable under the existing circumstances. Differences between actual results and estimates
are recognised in the period in which the results are known/materialised.The said estimates are based on the facts and events,
that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing
as at the reporting date.
(c) Property, Plant And Equipment
The Company has applied for the one time transition exemption of considering the carrying cost on the transition date i.e. April
1,2016 as the deemed cost under IND AS. Hence regarded thereafter as historical cost.Land is carried at cost. All other items
of property, plant and equipment are stated at cost less depreciation and impairment, if any. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted
for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the Statement of
Profit and Loss during the reporting period in which they are incurred.
Depreciation Methods, Estimated Useful Lives And Residual Value
Depreciation on Buildings, Plant and Equipment, Furniture & fixtures,Vehicles and office equipments, is provided on a Straight
Line Method over the estimated useful lives of assets. The Company depreciates its property, plant and equipment over the
useful life in the manner prescribed in Schedule II to the Act, and management believe that useful life of assets are same as
those prescribed in Schedule II to the Act, except for (i) Solar power plant which based on an independent technical evaluation,
life has been estimated as 25 years (on a single shift basis), (ii) parts of some items of property, plant and equipment that
require replcement at regular intervals , which are different from that prescribed in Schedule II to the Act.
The residual values are not more than 5% of the original cost of the asset. The assets residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of each reporting period.In case of pre-owned assets, the useful life is
estimated on a case to case basis. Gains and losses on disposals are determined by comparing proceeds with carrying
amount. These are included in the Statement of Profit and Loss.
(d) Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original
maturity of three months or less, which are subject to an insignificant risk of changes in value.
(e) Inventories
Inventories of Raw Materials, Work-in-Progress, Stores and spares, Finished Goods and Stock-in-trade are stated ‘at cost or
net realisable value, whichever is lower’. Goods-in-Transit are stated ‘at cost’. Cost comprise all cost of purchase, cost of
conversion and other costs incurred in bringing the inventories to their present location and condition. Cost formulae used are
‘First-in-First-out’, ‘Weighted Average cost’ or ‘Specific identification’, as applicable. Due allowance is estimated and made for
defective and obsolete items, wherever necessary.
(f) Investments And Other Financial Assets
(i) Classification
The Company classifies its financial assets in the following measurement categories:
(1) those to be measured subsequently at fair value (either through other comprehensive income, or through the Statement
of Profit and Loss), and
(2) those measured at amortised cost.The classification depends on the Company’s business model for managing the
financial assets and the contractual terms of the cash flows.
(ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value. Transaction costs of financial assets carried
at fair value through the Profit and Loss are expensed in the Statement of Profit and Loss.
Debt Instruments:
Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and
the cash flow characteristics of the asset. The Company classifies its debt instruments into following categories:
(1) Amortised Cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of
principal and interest are measured at amortised cost. Interest income from these financial assets is included in other
income using the effective interest rate method.
(2) Fair Value Through Profit And Loss:
Assets that do not meet the criteria for amortised cost are measured at fair value through Profit and Loss. Interest
income from these financial assets is included in other income.
Equity Instruments:
The Company measures its equity investment other than in subsidiaries, joint ventures and associates at fair value
through profit and loss. However where the Company’s management makes an irrevocable choice on initial recognition
to present fair value gains and losses on specific equity investments in other comprehensive income (Currently no such
choice made), there is no subsequent reclassification, on sale or otherwise, of fair value gains and losses to the
Statement of Profit and Loss.
(iii) Impairment Of Financial Assets
The Company measures the expected credit loss associated with its assets based on historical trend, industry practices and
the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied
depends on whether there has been a significant increase in credit risk.
(g) Impairment Of Non-Financial Assets
The other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognisedfor the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purpose of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets other
than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
(h) Non-Current Assets Held For Sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction
rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying
amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits,
financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.Non-
current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable
to the liabilities of a disposal Company classified as held for sale continue to be recognised.
(i) Borrowings
Borrowings are initially recognised at net of transaction costs incurred and measured at amortised cost. Any difference between
the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Profit and Loss over the
period of theborrowings using the effective interest method.
(j) Borrowing Costs
Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and borrowing costs are charged
to Statement of Profit and Loss.
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